For decades, central banks lorded over markets. Traders quivered at the omnipotence of monetary authorities -- their every move, utterance and wink a reason to scurry for safe havens or an opportunity to score huge profits. Now, though, markets are the ones doing the bullying.

Take New Zealand and Australia. Yesterday, the Reserve Bank of New Zealand slashed borrowing costs for the second time in six weeks even as housing prices continue to skyrocket. A day earlier, its counterpart across the Tasman Sea (already wrestling with an even bigger property bubble of its own) said a third cut this year is "on the table."

Just one year ago, it seemed unthinkable that officials in Wellington and Sydney, more typically known for their hawkishness and stubborn independence, would join the global race toward zero. But with commodity prices sliding, China slowing and governments reluctant to adopt bold reforms, jittery markets are demanding ever-bigger gestures from central banks. Even those presiding over stable growth feel the need to placate hedge funds, lest asset markets falter. When this dynamic overtakes countries such as New Zealand (growing 2.6 percent) and Australia (2.3 percent), it's hard not to conclude that ultralow rates will be the global norm for a long, long time.

Indeed, the major monetary powers that are easing -- Europe, Japan, Australia and New Zealand -- have all suggested rates may stay low almost indefinitely. Those angling to return to normalcy, meanwhile -- the Federal Reserve and Bank of England -- are pledging to move very slowly. Even nations with rising inflation problems, like India, are hinting at more stimulus.

"As interest rates continue to fall across most of the globe, central banks are also united in their main message: Once rates have come down, they're likely to stay down," says Simon Grose-Hodge of LGT Bank. "And when they finally do tighten, the 'normal' rate is going to be a lot lower than it used to be."

Could the People's Bank of China be next? "With underlying GDP growth still looking weak, more monetary policy moves are likely," says Adam Slater of Oxford Economics. "And China may even face the prospect of short-term rates dropping towards the zero lower bound."

In April 2013, International Monetary Fund head Christine Lagarde asked her staff to study how markets might react to major central banks reversing their easing policies. Yet Japan's experience illustrates just how hard it is to restore normalcy after a huge economic shock. Markets, businesses, banks, consumers and politicians alike quickly learn not just to love free money, but to rely on it. Zero rates are about the only thing keeping Japan's huge debt load sustainable, thus making it all but impossible for Bank of Japan Governor Haruhiko Kuroda to taper.

Even if Fed Chair Janet Yellen manages to pull off a rate hike or two later this year, she'll be hard-pressed to return to the monetary-policy framework that prevailed before the Lehman Brothers crisis. Yellen would be pilloried by Wall Street and summoned to Capitol Hill for a browbeating if she tried. Similarly, European Central Bank President Mario Draghi would face rebellions across the euro zone to any tapering moves.

At this point, rather than pretend they can return to normalcy, central banks should be devising ways to adapt to a low-rate world. Surely, they should prod governments to do their part to boost growth and upgrade economies. But monetary authorities also must make sure the liquidity they churn out doesn't increase financial risks.

In New Zealand, for example, central bank Governor Graeme Wheeler has been experimenting with so-called macroprudential steps to tame asset bubbles, including limits on leveraged lending. Australia should be eyeing new regulations and taxes to make sure its record-low 2 percent benchmark rate doesn't add froth to property markets. That goes, too, for officials in the U.S., Europe and elsewhere still thinking they can regain their power over markets or the business cycle. Those days aren't going to return anytime soon.

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